Hospitality Report Nigeria

Hospitality Report

Nigeria 2018

Trends in the Travel & Tourism Sector

Introduction

Travel and Tourism is on a fast rise to becoming one of Nigeria’s major contributors to the country’s GDP and one of the largest employers of labour. Aside driving export, it also generates prosperity. This is remarkably evident in the positive growth of the sector in 2017 versus 2016. The objective of this report is to review the performance of the sector in 2017, provide insight on the technologies that are driving the sector, and share data on the buying behaviour/pattern of the Nigerian travellers.

The Travel and Tourism landscape in 2017 grew by a landslide owing to the fact that the country’s economy became a bit stable after recovering from the heavy blow of the 2016 economic recession, which plummeted the prices of the country’s mainstay - oil. The impact of the recession was huge, as almost every facet of the economy crumbled, and it seemed hope of recovery was far-fetched. But, by mid-/end of 2017, the narrative changed for the better. Several economic intervention programmes were launched by the government, wherein private-public partnership was at the vanguard.

Travel and Tourism was directly responsible for 1.9% (N2.3 billion in actual numbers) of the country’s total GDP (estimated at $1.118 trillion) and was predicted to rise by 2.9% by end of 2018. But from a wider perspective, it’s estimated that between 2018 - 2028, Travel and Tourism will contribute 4.3% to the country’s GDP (N3.61 billion) year-on-year.

Aside the economy, the labour market (employment market) also benefited from the little dividends that the sector contributed. The number of direct jobs created by the sector peaked at 1.2 million compared to 651,000 in 2016 (1.6%), that’s 1.8% of total employment in the country. This is estimated to rise by 4.7% by end of 2018 to approximately 1.3 million jobs (1.8% of total employment).

One of the noteworthy developments we noticed in 2017 was the increase in the number of international arrivals. Unlike in 2016 where the country recorded a low influx of international tourists due to the security issues orchestrated by the terrorist group, Boko Haram in Northern Nigeria, the country welcomed 1.065 million international tourists, generating over N278 billion in revenue. According to forecast, Nigeria would have played host to 1.067 million foreigners by end of 2018 (that is +1.5% increase).

Nigeria’s economy still remains one of the strongest in Africa, and relies on oil as its main source of foreign exchange earnings and government revenues. The Services industry (hosting the Travel and Tourism sector) still remains the biggest sector among the 3 main sectors: Agriculture, Services & Industry.

The country’s population stood at 193.4 million, making Nigeria the most populated in Africa while mobile and internet penetration stood at 84% and 51% respectively.

Travel Contribution to the Economy

The Gross Domestic Product (GDP) of Nigeria peaked at $1.118 trillion by end of 2017 - a 0.8% growth year-on-year compared to -1.8% in 2016. This is indeed a significant rise from $1.109 trillion in 2016.

The Travel and Tourism sector accounted for 1.9% of total GDP as a direct contribution, and 5.1% as a total contribution to GDP. In monetary terms, Travel and Tourism contributed N2.298 billion to the GDP as a direct contribution*, and N6.205 billion as a total contribution* to the GDP.

The sector directly generated 1.2 million jobs, that’s 1.8% of total employment (and, it’s expected to rise by 4.7% in 2018 to 1.276 million). Whereas, total jobs created - both direct and indirect was 3.3 million, that’s 4.8% of total employment (expected to rise by 3.4% in 2018 to 3.427 million jobs).

Out of the N2.298 billion contribution of Travel and Tourism to the country’s GDP, leisure travel - both inbound and domestic - contributed 51% of the entire sum (N1.92 billion). On the other hand, business travel contributed 49% of the entire sum (N1.86 billion).

1 out of 20 jobs comes from the Travel & Tourism sector.

Both leisure and business spending are expected to grow by 2.7% and 2.8% by end of 2018, that is, N1.98 billion and N1.92 billion respectively. And by 2028, it is estimated that both will rise 3.7% and 4.6% respectively.

Year on year, domestic travel - either for business or leisure - continues to the biggest source of revenue for the sector. Although, while there was an increase in the number of international tourists who visited Nigeria compared to the previous year (2016), domestic travel grew exponential in 2017. This is a good performance for domestic travel, a clear indication that more Nigerians travelled for business and/or leisure within Nigeria in 2017.

By the end of 2018, domestic travel would have generated N3.63 billion and it’s expected to generate N5.47 billion by end of 2028.

International travel is estimated to generate N282.1 billion by end of 2018, that’s 1.5% growth increase year-on-year; and by 2028, it would generate N428 billion which is 4.3% growth increase.

Experts' Views

Allen Onyema

Chairman/CEO, Air Peace

“No tourism without on-time, reliable and safe flight services"

What is the role of the government in providing sustained infrastructure to enable better performance of the travel and hospitality industry?

The travel and hospitality sector is key to the growth of any economy. The benefits of this all-important sector will, however, remain elusive without having a stakeholder tasked with the responsibility of creating the right atmosphere for building the right kinds of infrastructure and ensuring that this is done in a sustainable manner. No stakeholder can perform this role better than the government. One of the ways the government can do this is through the right policy formulation. The government can also achieve this by encouraging tested private sector players to be involved in providing sustainable infrastructure through easy access to credit facilities. Establishment of mutually beneficial public-private partnerships will also help in this regard.

What is your airline’s contributions to promoting domestic and intra-Africa tourism?

The vision of Air Peace is to create seamless connections and network options for the domestic, regional and international markets. We today operate into and out of twelve domestic and four regional destinations. We have embarked on a massive expansion of our route network under our no-city-left-behind project aimed at providing flight services to underserved and unserved domestic and regional destinations. The biggest beneficiary of our operations, I dare say, is the tourism sector. There is no tourism without on-time, reliable and safe flight services, which we have been reputed for since we launched our operations in 2014. Our flight operations have made it possible for tourists, leisure and business travellers to connect their destinations with ease. This has had a great positive impact on tourism in Nigeria and Africa as a whole.

What technological tools do you use in bridging the gap between lifestyle and geography?

At Air Peace, we understand the potential of technology in bridging the gaps between people's lifestyles and their spatial locations. We are leveraging technology to eliminate the barriers imposed by distance and guaranteeing our valued guests and other users of air transport the freedom to live the way they choose. We have, for instance, automated our flight operations to the point where you can complete your reservation, make payment and check in online without stepping out of the comfort of your home. We envisage complete paperless operations soon. We run a 24-hour call centre for our customers to call in and get their issues resolved without hassles. We also heavily rely on social media tools - Facebook, Twitter, Instagram, Whatsapp, among others - to engage, inform and resolve the complaints of our valued customers. We clearly understand that the world has relocated to the IT superhighway and are daily striving to harness and take full advantage of its boundless reach to deliver a whole new experience to our esteemed customers no matter their lifestyles and geographical locations.

Domestic Tourism Overview

The average price of hotels in the most popular destinations decreased significantly compared to 2016. For instance, average price in Lagos went down to $45 from $78 in 2016; Abuja decreased to $42 from $70; Benin decreased to $32 from $48, etc.

Although, ‘Pay at the Hotel’ was the most preferred form of payment in 2017, there was however a sharp decrease compared to 74% in 2016. Credit/debit card payment dipped to 4% from 12% in 2016. Mobile money, such as direct transfer through shortcodes seems to be gaining gradual acceptance. Thus, we noticed about 19% of our customers made payment for bookings through mobile money. We noticed 10% of our customers in 2017 chose payment at Jumia Travel offline shops in different locations in Lagos & Abuja.

Another interesting trend we noticed would be bookings by star rating. In 2016, 5% of our customers booked a 5-star hotel; 21% booked a 4-star; 50% booked a 3-star; 21% booked a 2-star; and 3% booked a 1-star hotel.

The reason ‘Pay at the Hotel has become the most preferred method of payment is because it allows guests to examine the hotel room and its facilities before check-in. If the room meets the guest’s requirements, then payment is made. And if not, the guest is free to visit another hotel of his/her choice.

Experts' Views

Chris Odor

GM Westwood Hotel

“Online travel agencies have made hotel booking more convenient and comfortable for the customers”

What is the impact of new technologies and Online Travel Agencies (OTA) to the hospitality industry in Nigeria?

You would agree with me that there has been a huge increase (about 45-50% annually) in online booking for hotel accommodation and flight compared to 20 to 30 years or more ago. I can remember in those days when you need to first take a trip to a travel agent to book a flight and may be hotel accommodation along with. Things have really changed drastically this days because of the new technology been introduced over the years where customers can simply go online in Nigeria to make their booking through companies like Jumia Travel and so on, plan their holidays and business trip conveniently at the comfort of their room or office. Is this not amazing?

Another strategy is where airlines and hotels operators have sidelined these high street travel agencies byencouraging customers to book their flights and hotel accommodation even from their website and makepayments from the site. Though this is not a good idea for the travel agencies who are in business asintermediaries between customers and the services they want.

For customers, players in hospitality industry and the OTAs, this new technology and innovative ideas has made it more convenient to transact business make bookings comfortably wherever whenever, easy to compare prices with various options to choose from just at tip of the fingers, it’s cost effective for the operators in the hospitality industry as a form shortcut to showcase their product and services, build brand awareness and visibility quickly on a wider, more robust and dynamic network or platform created by some of these OTAs.

Finally, Increase in revenue and creation of new jobs (need for call centers or customer service points) in the hospitality industry in Nigeria.

How is Social Media impacting the hotel business in terms of marketing?

Social media for hotels has become one of the best tools in marketing product and services, this has tremendously impacted the hotel business in a huge way, cost very little to almost nothing with impressive result, that is if properly managed. There are various platforms for social media networking provided to enhance the way we marketing our products and services in any business apart from hotels but my advice is always to stick to only 3; basically Facebook, twitter and Instagram but encourage everyone on your management team and key staff to sign in on Linkedin. This I will support with 1 or 2 bible passages Leviticus 26:8 “And five of you shall chase an hundred, and an hundred of you shall put ten thousand to flight”. Deuteronomy 32:30 “How should one chase a thousand and two put ten thousand to flight”. Social has really transformed the way we go about our routine marketing enhancing direct interaction with potential customers, pass information like promotions of special and seasonal discounts, social events, happy hour etc. A way of receiving guest feedback almost immediately coupled with the fun associated with social media marketing. Hotels operators/marketers are now beginning to grasp the various benefits associated with social media marketing. Just to mention a few; promotion of product and services, brand awareness globally and quickly too, a means for boosting sales, potential to attract huge amount of traffic and keeping tab on customers regularly and consistently.

Are you confident that Nigeria’s tourism is receiving maximum promotion from the ministry? If not, what are your recommendations?

Nigeria is a country with huge and diverse or multi-cultural entities, landscape, arts, artifacts (Benin bronze, Nok Terracotta, Igbo-Ukwu bronze etc.), museums, and other lovely places you can visit by yourself, with families and friends. Nigeria has a very rich cultural heritage with lots of fun locations waiting to be tapped. Tourism promotion in Nigeria has its basic problems, in terms of inadequate and poor infrastructures coupled with terrorism and insecurity, political and religious issues, corruption, lack of vision and poverty as Nigeria is been ranked 24th globally in tourism and ranked as no.1 most poorest nation I the world which is still in dispute.

Whether 1st 2nd 3rd or whatever in the world, we can clearly see that poverty is everywhere in Nigeria, people are suffering and no longer smiling leading to all sorts of criminal activities. These issues are affecting the growth of tourism and needs to be resolved as quickly as possible for us to be in business. Though, there are many other problems generally associated with promoting tourism: lack of trained personnel and management, the standard and state of our airports and air transport systems, level of health care facilities. In my opinion, I wish I could be more confident in the ministry achieving much in the area of tourism promotion in Nigeria. The ministry and its agencies both at the federal and state levels should not focus mainly on collection of annual dues and levies from hospitality operators to meet their annual revenue target but make every effort to invest and more funding in tourism promotion; promoting Nigerian tourism around the globe, create more jobs, increase revenue in foreign and local currency for the country and operators in the hospitality industry and at the same time basically encourage more foreign investments.

Recommendations

Invest in marketing and promote Nigerian tourism around the globe to create more jobs, increase more revenue in foreign currency for the country and operators in the hospitality industry and encourage foreign investments basically.

Lara Adagunodo

MD, Jumia Travel

“Our performance in comparison to 2016 full year showed a 65% increase”

How did Jumia Travel fare in 2017 in terms of volume of bookings especially during special holidays & special campaigns i.e. Black Friday?

2017 has been referred to as the healing year for Nigeria’s economy as we started to climb out of recession. This upturn of events clearly affected the business world as 2017 became a definitive year for our growth as a business. We had a record increase in both sales and customer engagement. Our performance in comparison to 2016 full year showed a 65% increase. Bookings increased by over 70% during the Black Friday weekend compared to 2016 Black Friday recording the most successful Black Friday event ever.

What are the top 5 destinations Nigerians travelled to within the country in 2017, and what are these locations known for?

The top 5 destinations are Lagos, Abuja, Ibadan, Enugu and Calabar. Whereas locations like Lagos, Abuja and Enugu are visited for the business opportunities available, more local tourists chose Calabar and Ibadan for weekend getaway. Travel to these leisure destinations increased during the weekends and summer holidays, while business travel occurs year round.

How is Jumia Travel leveraging technology to drive innovation within the hospitality industry?

We continually strive for new methods and tools to enhance our user and customer experience. From our award winning progressive web app to the extranet tool created for hotel managers, and our recently launched flights marketplace, our focus remains using tech to make our customers’ lives easier. As the average Nigerian traveller is not yet fully confident with completing all flight bookings online, we still create a great experience with our 24/7 Customer Service Centre and offline travel shops in Lagos and Abuja.

Technology trends shaping the hospitality sector

Hospitality outlook

Areas of Opportunity

Provision of resident rates

B2B and Government-Business Partnerships to provide affordable data

Provision of high quality personalized services to meet travellers’ demands

Business investment opportunities with increase in international travels

*Direct contribution to the GDP is calculated as total spending by residents and non-residents for business and leisure purposes as well as government spending on Travel and Tourism, directly linked to visitors, either cultural (museums) or recreational (national park).

*Total contribution of Travel and Tourism is calculated as Travel and Tourism investment spending, government’s spending on behalf of the community (such as, tourism marketing and promotion, aviation, administration, security services, resort area security services, resort area sanitation services, etc), and domestic purchases of goods & services by sectors dealing directly with tourists.

The travel and tourism industry in Nigeria has continued to experience growth over the years, with increased technological advancement among other factors. The Jumia Travel Hospitality Report documents trends in the travel and hospitality sector, highlighting how technology continues to shape the industry, trends in Nigeria's domestic travel, economic impacts of the travel and tourism sector as well as opportunities and challenges in the hospitality industry.